Hidden rental car fees catch consumers when they are vulnerable

When Frank Keel last rented a car at the Salt Lake City International Airport, he had a surprise waiting for him.

"They tacked a fee on that wasn't quoted in the online reservation," says Keel, a federal government employee who rents about 30 cars a year.

Keel complained, but agents at the rental place said they couldn't do anything about it.

He asked what the charge was for and was told, "This is for the wheels on the car."

"I've seen some ridiculous fees, but this beats them all," he says.

Car rentals are a $23.63 billion industry in the United States, with 1,857,000 cars in service in 2012, according to Car Rental News. That is $7.2 billion more in revenue than 10 years earlier. As renting cars becomes more accessible and as fees expand, it becomes more important to know how to save money and avoid fees and getting stuck with unexpected charges that can run into the thousands of dollars.

Neil Abrams, founder of Abrams Consulting, a car rental consulting and travel market research organization, says that 20 years ago, car rental companies would bundle all of the various fees into the rental rates. He says it was "confusion among customers" who wanted to know the details of the costs that led to the unbundling of the fees.

Now companies list fees and taxes such as special taxes for local projects, airport concession fees, vehicle licensing fees and, as Keel learned, even tire disposal fees.

All these fees, Abrams says, could be as much as 40 to 50 percent of the final cost to rent the car.

Rental car businesses are not particularly happy about having to tack on fees for convention centers, stadiums, museums, light rail and other local projects to the costs of their products. But since these fees are imposed by the government or by the airport, there is little that can be done to get around most of them.

Airport fees are an exception. By using a free shuttle or a ride from family or friends to a rental car office away from the airport, a person could save 8 to 12 percent of the total cost.

"You almost don't know where the next fee is coming from," he says. "If they really wanted to, they could have a price that includes everything. They say it is a service to break it all out. But it makes their prices look lower and makes us believe we are paying less."

While government and other outside fees don't help out the car rental companies' bottom lines, there are other add-on fees that may.

Prepaid gas

Barry Maher , a motivational speaker who rents 25 to 30 cars a year, remembers his first encounter with prepaid gas fees. It sounded like a good idea.

"What they didn't tell me was I wasn't paying for just the gas I was going to use, but for the full tank," he says. "I only drove the car 50 miles."

Elliott cautions people who are doing the traditional bring-the-gas-tank-back-full option. He says some rental places will charge for a full tank of gas unless there is a receipt — even if the needle is on full.

Unsure about insurance

The biggest fee hurdle that car renters face is when the rental company offers extra insurance.

Elliott says the employees at the counter get promoted and get bonuses depending on how good they are at upselling people into insurance.

"A lot of time you are already covered," Elliott says.

The "policies" the car rental agencies offer are not really insurance, but "Collision Damage Waivers." They are waiving their rights to go after a person for damaging the car. A waiver like this is not insurance for any damage a person might cause to third parties.

The best thing to do is to know ahead of time whether renting a car is covered under an existing car insurance policy. People should check their policies and call their insurance agent to make sure they are covered for everything that could go wrong.

Many credit cards offer secondary coverage for things not covered by a person's regular insurance. There are even companies that offer third-party insurance for renting a car.

The time to do this investigation of insurance is before a person gets to the counter to pick up their car.

"When you pick up your rental car," Elliott says, "your brain leaks out of your head. Take a breath. Take some time."

Under age

Wil Wright, an engineering student at the University of Virginia, rented a car for the first time when he visited Salt Lake City in April. He called the car rental company ahead of time and was told that because he was under 25 years old he would have to pay more.

"They said it would cost maybe $100 to $150 more," Wright says, "but the under-age fee ended up almost doubling my bill."

Avoiding the gotchas

Elliott recommends always taking photographs of the car inside and out both before you drive it away and when you come back to the lot.

"There is a real problem with scratches and dings," he says. They will come after you for the big bucks. They'll charge you not only for the repair, but for the loss of use, various nuisance fees and processing fees. There is a marvelous universe of fees they will charge you."

There is little incentive for a rental company to closely inspect a car before you bring it back. There is also little way for a person to say they didn't cause damage when they bring back a car — unless they have a photograph or have marked down the dings, scratches and other damage on a form before they drive away.

"Taking a photograph would avoid 90 percent of the problems that people run into," he says.

Frank Keel, the federal government worker, says he had to pay once for a nick in the windshield.

"The next time I went over the windshield with a fine-tooth comb and noted every one of them," he says.

Early and late

People expect that if they turn in a car late that they may have to pay a penalty — even pay for a full day's rental. But now some car rental companies are charging people for turning in a car early.

Elliott says most car rental places have a grace period of about a half hour to turn in a car late. It also makes sense that if someone rented a car with a weekly rate that they might be charged a higher daily rate if they turn it in, say, a day or two early. But now some companies are charging people for turning a car an hour or so early — saying they broke the contract.

"If you read the terms of your rental," Elliott says, "at the counter or on the website, you can usually protect yourself."

He also says, in case of turning in a car late, that normally a person can call if they are running behind and the manager will usually waive the late fee.

Like all transactions, it never hurts to ask for some discretionary fees, like the late fee, to be waived. Also, being aware ahead of time takes away the panic and takes away the effectiveness of high-pressure salesmanship.